Starting up a new business is an exciting time. However, it can be expensive if you don’t keep a sharp eye on your finances from the outset. Many businesses fail in the first year due to financial problems, and they can be left with lots of debt. If you are considering starting your own business, then read these seven budgeting tips for new businesses so you can avoid the pitfalls,
Plan Your Budget
Knowing how much money you will need to start your company can be difficult. You will have to factor in rent, bills, supplies, and various other things to get you started, and then you will need to consider your running costs. It is best to plan your budget for the first twelve months and see how you get on. Planning ahead will help you manage your finances, but things will change during that time, so don’t be afraid to update it when you need to; just make sure you can cover your outgoings.
Expect The Unexpected
Unexpected bills can put a massive dent in your carefully planned budget, so factor these in too. Add an extra 10% into your budget for unexpected bills and expenses. That way, it won’t be as much of a shock when you receive them. Hopefully, you won’t have any unexpected expenditures. You can keep the additional money in your business bank account to help you expand your business when the time is right and stay solvent.
You may want to become the biggest company in town and the most recognized business in your industry. Still, it would be best if you didn’t try to achieve this overnight. Instead, start small, and you can expand as the money starts rolling in, attempt to be too big immediately, and you could soon run into financial difficulties.
Consider how much space you will need to start your business. Some of the best and most long-lasting companies have been started from an entrepreneur’s spare bedroom or garage. If you are working alone and don’t have a lot of stock, setting up from home will save you a lot of money in the beginning. You can always upgrade to a larger office once you start making money and employing staff.
If you need to rent space, consider how much space you need. A small office and tight storage space might not be ideal forever, but it will keep your costs down for the first few months, and this will be important while you wait for your first invoices to be settled.
Shopping around for supplies and services could save you a lot of money and help you manage your budget. Don’t be afraid to ask for a discount. After all, you may become a company’s best customer in the future, and they will be glad they retained your business.
You may be offered a good discount if you buy in bulk but think carefully before you agree. It may sound like a fantastic deal, but although the price per unit will be lower, the overall price could be costly. Consider whether you are likely to use that product before it goes out of date. Consider what you will do with the bulk you bought if your business fails.
Buy Second Hand
Many items for your new business can be brought second-hand, saving you a significant amount of money. Things such as IT equipment and office furniture are often resold, and you can get a good bargain on them. You may be able to get a reasonable price on tools and machinery too. Please ensure they are of excellent quality, as they will last you a while. Don’t be tempted to buy inferior quality just because it is cheaper. You can upgrade your equipment when you are making good money, but to start with, this is a fantastic way of keeping your costs down.
Take Advantage of Free Marketing
Marketing can be expensive, but you don’t have to spend lots of money on TV or radio advertising when you can use social media and customer review sites. If you have a local business, you can join local groups on social media. These will often let you advertise your business for free on certain days. You can take pictures of the work you have done and put these on social media to attract potential customers too.
Depending on your business type, you could find potential customers looking for you on social media and asking if anyone has any promising contacts. This works exceptionally well for tradespeople, repair services, and professional services such as lawyers and accountants.
There are many reviews online where satisfied customers can post reviews of your product or service. Many potential customers read these when shopping around, which can be an excellent way to gain customers.
Don’t Forget the Insurance
Many entrepreneurs try to cut corners when starting up rather than cutting costs, which can be a huge financial error. For example, not taking out business insurance might save you a small amount of money per month, but if you need to make a claim and can’t, the cost may run into thousands. Instead, shop around for the best small business insurance. You will also need to ensure the items in your office and possibly upgrade your auto insurance if you visit clients. Once you have found the best small business, content, and auto insurance, don’t be tempted to cancel them if finances get stretched. There will be other places you can make cutbacks without losing the essentials.
Starting a new business doesn’t have to cost you a fortune. However, keeping the prices down in the first 12 months of trading could make the difference between whether your business succeeds or fails. Follow these tips, and you should have years of happy trading.
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